Invest like a Baniya!

Baniya is a community which has consistently produced traders and businessmen, and they all street smart and knows where to bet their money on.

Lets learn the basics of Baniya Buddhi:

Buy Low Sell High –

This is mentioned in a lot of books by biggest of the investment gurus, and this is the essence of the Baniya community where in they purchase goods at low price in the market and sell it at a higher price. Best example in the market today is Mr. Damani of D-Mart, he followed the same concept of sourcing goods at the lowest possible price and sell with good profit margins and still providing value to customers.The point here is to understand the importance of buying assets at a steep bargain and selling when it is above or at fair value.

Never follow the Herd –

Blindly following the herd will lead you to fall in the trap, retail and amateur investors without having the right knowledge follow the pundits on TV without having to understand the dynamics of that particular asset. They enter that particular asset at the wrong time. Baniya`s are among the best to follow this, they will try to purchase only a few assets but at the best price and not try to trade in stuff which they do not understand.Point is to follow stocks which you understand and invest in those.

Never lose money –

Even if you are making a long term investment have a threshold for losses. If a stock goes from 100 to 50, you lose 50% but for the same stock to now again reach 100 it is a 100% return. Thus as a prudent investor always sell your investment if they breach a loss criteria. 25-30% loss could be an indicator to sell your loss making investment even if you think prospects are good. As it may be that you would have made a mistake in valuing that stock. Baniya will never keep inventory whose value is deteriorating, they will immediately liquidate it after a certain time even if it is at a loss.

To be continued.